Friday, November 20, 2009

Steamworks to leave Bayfield

My Durango Herald colleague Dale Rodebaugh breaks some big news on Steamworks Brewing Co. in today's paper. Steamworks plans to abandon its Bayfield brewing facility and retrench in Durango. The article reports:

Steamworks Brewing Co. is phasing out its Bayfield plant, where about two-thirds of its production takes place.

"Our intent is to retrench in Durango, which will be done in phases," co-founder and CEO Kris Oyler said Thursday. "We'll bring most of our operations here."

Sales are not the problem, Oyler said. Month-in, month-out sales this year are up 30 to 40 percent, Oyler said. Myriad cost pressures, including transportation and the price of hops, which has tripled in the preceding 18 months, are the culprit, Oyler said.

This is big and bewildering news. The story of craft beer in this nation since the mid-'80s has been one of continuous growth. It's remarkable to see this dramatic a sign of pulling back.

Certainly, cost pressures for hops and transportation are real, but it's unclear why Steamworks is pulling back. Oyler says in the article:

"We tried to run a restaurant in Bayfield, but our business model didn't work as we had planned."

Please allow me to indulge in some informed speculation: Bayfield is a tiny, working-class town, population 2,024. It's entirely possible that there just aren't enough customers in Bayfield to support a restaurant-brewpub. But that doesn't explain why three brewery employees were laid off, while restaurant staff was unaffected.

This news leaves more questions than answers.

Hopefully, this retrenchment allows Steamworks to survive the tough economy and emerge in a sustainable manner. The brewery plans to focus on its Colorado markets. It doesn't sound as if Steamworks' Durango location will be substantially affected.

One thing it does make clear: Ska is now clearly the dominant Durango-based brewer, with about double Steamworks' production.

P.S.: Check out Beer 'N Bikes take here.


  1. As a former Bayfield resident I can say that the Bayfield restaurant was never packed (as the Durango location often is), but hardly ever empty either.
    It was my experience that most people in Bayfield would drive the short distance into Durango to go out to have dinner, so I agree that the town can't sustain a restaurant, a taproom with no food, or even a non-retail brewery would make a lot more sense in Bayfield.

  2. I know that earlier this year there was a hop shortage but the reports that hops are now overplanted should help drive down hop prices for next year. But transportation costs are the big killer for just about every business that distributes product. Makes it all the more important to support local, buy local and keep the product local. Are they planning to remove some out of state distribution too? Would be a shame.